In a startling development in Hong Kong’s crypto sector, a scam involving “hell banknotes” has led to the arrest of three employees from a crypto exchange shop in Tsim Sha Tsui.
The suspects allegedly deceived a customer into transferring HK$1 million (approximately $127,500) worth of Tether (USDT) in exchange for counterfeit currency traditionally used in Chinese rituals. This incident marks a concerning trend in misusing digital currencies for fraudulent schemes.
Crypto Scam: The Arrest And Police Investigation
The scam was exposed when a 35-year-old man reported to the Hong Kong Police Force (HKPF) that he could not receive any real currency after attempting to convert his cryptocurrency at the shop.
He was shown stacks of what appeared to be cash but were actually ‘hell banknotes’—paper money intended as offerings to the deceased, not legal tender. The revelation of this deception prompted immediate police action.
The HKPF’s technology crime division moved quickly to detain the three men, aged 31 to 34, involved in the scam operation.
During the probe, police confiscated 3,000 hell banknotes, a safe, and a note-counting machine, indicating the deliberate nature of the scam. The suspects had convinced the victim to transfer his USDT to their wallet, only to provide worthless paper in return and then flee the scene.
Notably, this fraudulent act could lead to severe legal consequences for the perpetrators. Hong Kong law stipulates up to 14 years in prison for fraud. The suspects are also potentially liable for acquiring property by deception, which carries a penalty of up to 10 years.
Preventive Measures And Broader Implications
In response to this and similar incidents, the HKPF has issued an advisory urging the public to use only ‘licensed and authorized cryptocurrency exchanges.”
According to the report, they emphasized the importance of “inspecting banknotes” and being “vigilant about the authenticity” of currency received in transactions.
Furthermore, this incident is part of the region’s larger pattern of crypto-related scams. Last month, Hong Kong customs officials arrested three individuals linked to a HK$1.8 billion ($228 million) money-laundering operation using a crypto platform and bank accounts associated with shell companies.
These operations highlight criminals’ sophisticated methods to exploit the digital finance ecosystem.
Florence Yeung Yee-tak, commander of the Financial Investigation Division of the Customs Department, noted the difficulties in investigating these crimes due to cryptocurrencies’ inherent “anonymity” and the lack of “jurisdictional boundaries.”
According to Yeung Tak, the department relies heavily on intelligence, capital flow analysis, and comprehensive financial investigations to combat these kinds of illegal crypto activities.
Featured image from Unsplash, Chart from TradingView
